How startups and enterprises can collaborate to drive true innovation

Enterprise partnerships can give startups a head start – and help established corporations stay ahead of the curve

5Jun

The advent of digital technologies has made it more essential and more difficult than ever for businesses to be truly innovative. However, partnerships between enterprises and startups can provide the former with the ideas need to stay ahead of their competition, and the latter with previously inaccessible resources and opportunities. Business expert and CEO of MachineMax Amit Rai examines the essential processes required for these mutually beneficial partnerships to form and succeed.

Since the advent of the new millennium, digital technologies have disrupted business as we know it. When they first emerged, technology like personal computers, smartphones, social networking and cloud computing represented threat and opportunity in equal measure.

I was at Microsoft in the early 2000s when it failed to integrate connectivity and mobility. To put it lightly, the company publicly lacked innovation for much of that time. It was not until current CEO Satya Nadella embraced cloud technology that Microsoft bounced back from certain doom.

Working with Here, formerly known as Nokia Maps, also gave me a front-row seat to automakers' reluctance to integrate technology into our vehicles. Original equipment manufacturers could have leveraged mobility and connectivity to offer sought-after services, but they refused to try. These industry leaders lost the tech race to outsiders like Tesla, Apple and Google.

We have watched digital companies like Netflix, Amazon, Airbnb and Uber completely change the way core customer needs are met. Large enterprises are now realizing that they need to adapt their customer service models and they are increasingly looking at digital startups to save (or at least revitalize) their business models. In fact, it appears they often need each other to thrive.

This symbiotic relationship between established companies and rising stars is at the core of modern business development. I should know. My company was born from such a relationship.

Disrupting with Shell

Shell is one of the largest oil conglomerates in the world, and not long ago, the company was looking for different ways to expand its core offerings in industrial lubricants. The goal? Find new offerings that leveraged the company's existing market strength to augment business (and, ideally, land new customers). So we partnered up.

Originally, Shell sought to analyze machine utilization data to augment its core business; it also wanted to offer the right product at the right time to existing customers. But in talking to customers and performing market research, we saw a bigger opportunity: Most construction and mining companies were struggling to measure their operating hours and apply that data to increase productivity and cut costs. We ended up creating a wireless telematics system to help companies maximize machine profitability by increasing utilization and decreasing operating costs.

On the surface, it may appear that Shell and my company are working against each other's interests. After all, the more we help consumers, the less they would seemingly need Shell's products. But it was important to look beyond this simplistic view to see the real opportunity.

To continue growing, Shell is putting its customers first by increasingly offering a full suite of products and services to drive down the total cost of ownership for large machinery, to maximize utilization and to reduce emissions. The company's shift from a product provider to a solutions provider created a great opportunity for us to generate new value for both parties.

Together, we have forged a natural partnership where Shell and my company can achieve a lot. Leveraging a symbiotic relationship like this requires the following insights.

Understand your partner's goals

Not everyone reading this is a C-suite executive for a large enterprise. Some of you (like me) are running startups and are looking for corporate partners.

Finding your own Shell requires a deep understanding of your potential partner's long-term strategy. Determine if you are part of the core business plan or just another flavor of the month. To do that, get to know the decision makers in the organization. Companies do not make decisions – people do. And people have different motivators (e.g., company profits, corporate social responsibility, obtaining a promotion, etc.)

Once you develop strong working relationships with the right people, all you need is a governance mechanism to set your company's foundation. This means determining whether your strategy involves helping a big brand in the short term or completely disrupting it. If it is the former, discern how you will align your positioning with the big brand. In our case, Shell has a key brand promise of reducing total ownership costs and our sensors help Shell's customers to reduce them. Thus, our messaging is well-aligned.

Navigate a potential clash of cultures

Startups and enterprises often have different viewpoints on failure. The cost of one failure in an enterprise's core business is incredibly high. Boeing is a perfect example: Within a five-month period, two of its 737 MAX models crashed. In both instances, there were no survivors. Following the tragedies, American Airlines and Southwest Airlines canceled their respective 737 MAX flights through August 2019. Boeing reported that the aircraft suspension cost the company a whopping $1bn during the first quarter of 2019.

Not only is failure expensive, but it also does not come naturally to large companies. Thus, while startups like us grow and learn through simple mistakes, this can pose quite a challenge when it comes to working with larger corporations. There is no miracle elixir to solving the conundrum, but solid communication, deliberate decision-making and a reminder of what is at risk can make a huge difference.

Leverage opportunities that big partnerships bring forth

Partnering with Shell has given us various opportunities as a startup – whether by gaining exclusive access to global customers (to conduct research and test prototypes) or having Shell itself as a customer. Not only has this household name invested in us, but it has also used our product like any other customer. Ultimately, this provides an incredible platform to quickly iterate and improve our overall offering.

When partnering with a global corporation, use that global reach to grow. From day one of our relationship with Shell, we were able to conduct interviews with customers from five different countries. By partnering with a bigger company, you also gain access to large, influential vendors, valuable feedback from your partner and its constituents, and increased credibility in the eyes of customers.

While proceeding steadily (and even cautiously) should always be the case when pursuing a big-brand partnership, the benefits of securing one are boundless. With these pieces in place, you can acquire your first major corporate contract and start a successful business of your own.

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